Last week, Toronto-based Slate Asset Management announced that it is "accelerating its focus on essential real estate" by making a "strategic reduction" in its office portfolio.
"While we continue to believe the outlook for the office market will improve over time, we are focusing on the opportunity to scale our investments in sectors that are benefitting from strong tailwinds and high growth," said Blair Welch, who co-founded Slate Asset Management along with his brother, Brady.
In its press release, Slate defines that "essential real estate" as "real estate that supports the non-discretionary needs of day-to-day life, including grocery, residential, industrial and logistics, and healthcare."
"Our decision to sharpen Slate's focus on the theme of essential real estate will allow us to redeploy capital, expertise, and resources to asset classes within our portfolio that we believe are highly defensive and generate the best risk adjusted returns for our investors," added Brady Welch.
Slate Asset Management says that over 80% of its real estate portfolio is comprised of asset types outside of traditional office spaces and that "we believe this is an opportune time to direct our team's collective energy into the areas of our business that are best positioned to drive value for our partners."
To that end, Slate says it has reached an agreement to sell its stake in a privately-owned portfolio of 11 office properties in Midtown Toronto and Ottawa.
Upon inquiry by STOREYS, a representative from Slate said that the details of the transaction remain confidential and that they were unable to identify the 11 properties.
According to its website, Slate will continue to have some exposure to the office market, with several mixed-use development projects it is involved in expected to include office space.
After making the announcement on October 10, Slate then announced this morning that it had made its first investment in Portugal, acquiring a portfolio of 12 grocery real estate properties, in a move Slate said "further increases the Firm's exposure to high-quality essential real estate assets in Europe."
The "strategic reduction" in its office portfolio came a week after that it informed Slate Office REIT that it was terminating their external management agreement, in a move the REIT expects to lower its costs. Per their management agreement, Slate was obligated to provide 180-day notice of termination, and Slate is now working with the REIT to transition to internal management. As part of the move, both Blair and Brady Welch resigned from the REIT's Board of Trustees. Slate Asset Management remains the external manager of Slate Grocery REIT.
The 11 properties to be sold are also not the only office properties that have been put on the market this year.
In May, Slate Asset Management sold Sun Life Place, an office tower located at 10123 99 Street in Edmonton, to Ironwood Management for $32.5 million. In British Columbia, the two-tower Metrotown Place in Burnaby, which Slate had plans to redevelop, was placed under receivership this summer and has since been listed for sale.
